Barchart Morning Call
OVERNIGHT MARKETS AND NEWS

Mar E-mini S&Ps (ESH18 +0.12%) this morning are up +0.16% at a new record nearest-futures high on optimism in the U.S. economy. Also, lower market volatility is positive for equity prices as the VIX volatility index dropped to a 1-1/2 week low. In addition, a +0.51% increase in Feb WTI crude oil prices (CLG18 +0.81%) has given energy stocks a boost. Crude oil rallied on expectations EIA data tomorrow will show U.S. crude inventories fell -5.0 million bbl, the seventh weekly decline. European stocks are up +0.19% on signs of strength in Germany, Europe's largest economy, after German unemployment fell more than expected last month and the unemployment rate dropped to a record low of 5.5%. Asian stocks settled mostly higher: Japan closed for holiday, Hong Kong +0.15%, China +0.62%, Taiwan +0.85%, Australia +0.15%, Singapore +0.99%, South Korea +0.35%, India -0.06%. Strength in technology stocks lifted most Asian markets with China's Shanghai Composite climbing to a 1-1/4 month high.

The dollar index (DXY00 +0.19%) is up +0.25%. EUR/USD (^EURUSD) is down -0.32%. USD/JPY (^USDJPY) is down -0.06%.

Mar 10-year T-note prices (ZNH18 +0.09%) are up +2.5 ticks.

ECB Governing Council member Nowotny said the end of the ECB asset-purchase program is "within sight."

The German Dec unemployment change fell -29,000, stronger than expectations of -13,000. The Dec unemployment rate was unch at 5.5%, as expected and the lowest since German reunification in 1991.

The UK Dec Markit/CIPS construction PMI fell -0.9 to 52.2, weaker than expectations of -0.1 to 53.0.

U.S. STOCK PREVIEW

Key U.S. news today includes: (1) weekly MBA mortgage applications, (2) Dec ISM manufacturing index (expected unch at 58.2, Nov -0.5 to 58.2), (3) Nov construction spending (expected +0.5%, Oct +1.4% m/m), (4) minutes of the Dec 12-13 FOMC meeting, (5) Dec total vehicle sales (expected 17.50 million, Nov 17.40 million).

Notable Russell 1000 earnings reports today include: Rite Aid (consensus -$0.02).

U.S. IPO's scheduled to price today: none.

Equity conferences this week: Wolfe Oil & Gas Refiners Conference on Wed, Goldman Sachs Health Care Conference on Thu.

 

 

 

 

OVERNIGHT U.S. STOCK MOVERS

Aetna (AET +0.17%) was upgraded to 'Overweight' from 'Neutral' at Piper Jaffray with a 12-month target price of $207.

Wells Fargo (WFC +0.69%) was upgraded to 'Outperform' from 'Market Perform' at Bernstein with a price target of $69.

Dick's Sporting Goods (DKS +2.61%) was upgraded to 'Outperform' from 'Market Perform' at Wells Fargo Securities with a price target of $35.

American Express (AXP -0.37%) was rated a new 'Buy' at Deutsche Bank with a price target of $118.

Expedia (EXPE +1.38%) was upgraded to 'Buy' from 'Neutral' at Bank of America/Merrill Lynch with a 12-month target price of $145.

Harley-Davidson (HOG +2.32%) fell 3% in pre-market trading after it was downgraded to 'Underperform' from 'Neutral' at Longbow Research.

Itron (ITRI +1.61%) was rated a 'Strong Buy' at Raymond James with a 2-month target price of $84.

Sempra Energy (SRE -1.47%) fell 2% in after-hours trading after it proposed $2.5 billion in public offerings of its common stock in connection with its acquisition of Energy Future Holdings.

Howard Hughes Corp (HHC +1.20%) slid over 3% in after-hours trading after Pershing Square Holdings announced a proposed sale of all 2,067,490 shares it holds of HHC common stock via JPMorgan Chase.

Teva Pharmaceutical Industries Ltd (TEVA +0.84%) lost nearly 1% in after-hours trading after it was rated a new 'Underperform' at Leering Partners LLC with a 12-month target price of $15.

Atara Biotherapeutics (ATRA unch) lost nearly 3% in after-hours trading after it announced that it had commenced an underwritten public offering of $100 million in shares of its common stock.

MoneyGram International (MGI +0.99%) slumped 8% in after-hours trading after it dropped its merger plan with China's Ant Financial Services when it was unable to win approval from the U.S. Committee on Foreign Investment.

Tetraphase Pharmaceuticals (TTPH +2.70%) rose 5% in after-hours trading after it submitted its new drug application to the FDA for intravenous eravacycline for treatment of intra-abdominal infections.

MARKET COMMENTS

Mar S&P 500 E-mini stock futures (ESH18 +0.12%) this morning are up +4.25 points (+0.16%) at a new record nearest-futures high. Tuesday's closes: S&P 500 +0.83%, Dow Jones +0.42%, Nasdaq +1.80%. The S&P 500 on Tuesday rallied to a new record high and closed higher on positive carry-over from a rally in China's Shanghai Composite to a 1-1/4 month high on signs on strength in the Chinese economy after the China Dec Caixin manufacturing PMI unexpectedly rose +0.7 to a 4-month high of 51.5, stronger than expectations of -0.1 to 50.7. U.S. stocks were also supported by the +0.1 point upward revision in the U.S. Dec Markit manufacturing PMI to a 2-3/4 year high of 55.1, stronger than expectations of unchanged at 55.0.

Mar 10-year T-note prices (ZNH18 +0.09%) this morning are up +2.5 ticks. Tuesday's closes: TYH8 -11.50, FVH8 -6.00. Mar 10-year T-notes on Tuesday closed lower on negative carry-over from the jump in the 10-year bund yield to a 2-1/4 month high and on increased inflation expectations after the 10-year T-note breakeven inflation rate rose to a 9-1/2 month high.

The dollar index (DXY00 +0.19%) this morning is up +0.23 (+0.25%). EUR/USD (^EURUSD) is down -0.0039 (-0.32%) and USD/JPY (^USDJPY) is down -0.07 (-0.06%). Tuesday's closes: Dollar Index -0.364 (-0.39%), EUR/USD +0.0047 (+0.39%), USD/JPY -0.34 (-0.30%). The dollar index on Tuesday fell to a 3-1/4 month low and closed lower on strength in EUR/USD which rose to a 3-3/4 month high on hawkish comments from ECB Executive Board member Coeure who said the ECB's current extension of stimulus may be the last. EUR/USD was also supported by the jump in the 10-year bund yield to a 2-1/4 month high, which boosts the interest rate differentials of the euro versus the dollar.

Feb crude oil (CLG18 +0.81%) this morning is up +31 cents (+0.51%) and Feb gasoline (RBG18 +0.82%) is +0.0112 (+0.64%). Tuesday's closes: Feb WTI crude -0.05 (-0.08%), Feb gasoline -0.0327 (-1.82%). Feb crude oil and gasoline on Tuesday closed lower on increased Russian crude oil output after Russia 2017 crude production rose +0.1% to 10.98 million bpd, the highest since the collapse of the Soviet Union in 1991. Crude oil prices were also supported by the decline in the crack spread to a 1-week low, which reduces incentive for refiners to boost crude oil purchases to refine the crude into gasoline. Crude oil prices were supported by the drop in the dollar index to a 3-1/4 month low.

Metals prices this morning are mixed with Feb gold (GCG18 +0.17%) +1.0 (+0.08%), Mar silver (SIH18 -0.24%) -0.051 (-0.30%) and Mar copper (HGH18 -0.73%) -0.025 (-0.75%). Tuesday's closes: Feb gold +6.8 (+0.52%), Mar silver +0.061 (+0.36%), Mar copper 0.0225 (-0.68%). Metals on Tuesday settled mixed with Feb gold at a 3-1/2 month high and Mar silver at a 1-month high. Metals prices were boosted by the slump in the dollar index to a 3-1/4 month low and by increased inflation expectations that boost demand for precious metals as an inflation hedge after the 10-year T-note breakeven inflation rate rose to a 9-1/2 month high. Copper closed lower on long liquidation by funds after copper prices rose for 10 straight session to a 3-3/4 year high on Dec 28.

GLOBAL EVENT CALENDAR01/03/2018
Wednesday, Jan 3
US 0700 ET Weekly MBA mortgage applications.
1000 ET Dec ISM manufacturing index expected unch at 58.2, Nov -0.5 to 58.2. Dec ISM new orders, Nov +0.6 to 64.0. Dec ISM employment, Nov expected -0.1 to 59.7. Dec ISM prices paid expected -1.0 to 64.5, Nov -3.0 to 65.5.
1000 ET Nov construction spending expected +0.5%, Oct +1.4% m/m.
1400 ET Minutes of the Dec 12-13 FOMC meeting.
n/a Dec total vehicle sales expected 17.50 million, Nov 17.40 million. Dec domestic vehicle sales expected 13.30 million, Nov 13.46 million.
Thursday, Jan 4
US 0730 ET Dec Challenger job cuts, Nov +30.1% y/y.
0815 ET Dec ADP employment change expected +190,000, Nov +190,000.
0830 ET Weekly initial unemployment claims expected unch at 245,000, previous unch at 245,000. Weekly continuing claims, previous +7,000 to 1.943 million.
0945 ET Revised Dec Markit services PMI expected unch at 52.4, prelim-Dec -2.1 to 52.4.
1100 ET EIA weekly Petroleum Status Report.
1100 ET Treasury announces amount of 3-year T-notes (previous $24 billion), 10-year T-notes (previous $20 billion) and 30-year T-bonds (previous $12 billion) to be auctioned Jan 9-11.
1330 ET St. Louis Fed President James Bullard (non-voter) delivers keynote address at an economics convention in Philadelphia.
U.S. STOCK CALENDAR01/03/2018
Rite Aid CorpRAD USAft-mktQ3 2018 Earnings ReleaseQ3 18 (0.016)
Rite Aid Corp RAD US 17:00 Q3 2018 Earnings Call Q3 18